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Kforce Reports Fourth Quarter And Full Year 2012 Results

Stocks in this article: KFRC

Financial highlights for the fourth quarter and 2012 include:

  • Flex gross profit increased 30 basis points to 29.9% in Q4 '12 from 29.6% in Q3 '12 and increased 100 basis points from 28.9% in Q4 '11.
  • Selling, general and administrative expenses as a percentage of revenues for Q4 '12 was 26.9% compared to 27.3% for Q4 '11.
  • At the end of Q4 '12, the Firm had bank debt of $21.0 million, which was a result of the special dividend issued in December 2012 of $35.2 million and $19.0 million of open market repurchases of Kforce common stock during Q4 '12. There was no bank debt at the end of Q3 '12.
  • Net income from continuing operations in Q4 '12 before the impact of the impairment charge was $8.4 million, or $0.24 per share, an increase of 64.6% and 71.4%, respectively, from Q4 '11 which had net income of $5.1 million, or $0.14 per share.

Mr. Kelly stated, "In addition, looking forward to the first quarter of 2013, we expect revenues may be in the $268 million to $274 million range and earnings per share in the range of $0.09 to $0.12. The first quarter of 2013 has 63 billing days, one more than the fourth quarter of 2012. Implicit in the first quarter's guidance is a $0.09-$0.10 sequential impact from payroll taxes and a $0.03-$0.04 impact from human capital investments."

On Tuesday, February 5, 2013, Kforce will host a conference call to discuss these results. The call will begin at 5:00 p.m. Eastern Time.

The dial-in number is (877) 344-3890. The conference passcode is Kforce. The replay of the call will be available from 8:00 p.m. EST, Wednesday, February 6, 2013 through February 20, 2013 by dialing (855) 859-2056, passcode 43184399.

This call is being webcast by Shareholder.com and can be accessed at Kforce's web site at www.kforce.com (select "Investor Relations"). The webcast replay will be available until February 20, 2013.

About Kforce

Kforce (Nasdaq:KFRC) is a professional staffing and solutions firm providing flexible and permanent staffing solutions in the skill areas of technology, finance & accounting, health information management and government solutions. Backed by more than 2,500 associates and approximately 10,700 consultants on assignment, Kforce is committed to "Great People = Great Results" for our valued clients and candidates. Kforce operates with 63 offices located throughout the United States and one office in the Philippines.  For more information, please visit our Web site at http://www.kforce.com .

The Kforce Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3749 .

Certain of the above statements contained in this press release are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Factors that could cause actual results to differ materially include the following: business conditions and growth in the staffing industry and general economy; competitive factors, risks due to shifts in the market demand, including, without limitation, shifts in demand for our Technology, Finance and Accounting, Health Information Management and Government Solutions segments, as well as the market for search and flexible staffing assignments; changes in the service mix; ability of the Firm to complete acquisitions; and the risk factors listed from time to time in the Firm's reports filed with the Securities and Exchange Commission, as well as assumptions regarding the foregoing. In particular, there can be no assurance that we will continue to increase our market share, successfully manage risks to our revenue stream and successfully put into place the people and processes that will create future success. The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. The Firm undertakes no obligation to publicly update or revise any forward-looking statements. As a result, such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place undue reliance on these forward-looking statements.

       
       
Kforce Inc.
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
       
  Three Months Ended
       
  Dec. 31, 2012 Sept. 30, 2012 Dec. 31, 2011
       
Revenue by function:      
 Technology   $ 167,616  $ 170,577  $ 160,822
 Finance & accounting   58,624  58,729  56,672
 Health information management   19,406  18,157  18,578
 Government solutions   24,193  22,698  23,269
Total revenue 269,839 270,161 259,341
       
Costs of services 181,259 181,399 177,091
Gross profit  88,580  88,762  82,250
GP % 32.8% 32.9% 31.7%
Flex GP % 29.9% 29.6% 28.9%
       
Selling, general & administrative expenses 72,540 70,367 70,849
Goodwill impairment  3,858  --   -- 
Depreciation & amortization 2,371 2,659 3,013
       
Income from operations 9,811 15,736 8,388
       
Other expense, net 171 288 349
       
Income from continuing operations, before income taxes 9,640 15,448 8,039
       
Income tax expense 3,718 6,173 2,952
       
Income from continuing operations   5,922   9,275   5,087
       
Income (loss) from discontinued operations, net of income taxes  198  (7)  1,998
       
Net income  $ 6,120  $ 9,268  $ 7,085
       
       
Earnings per share - diluted  $ 0.17  $ 0.26  $ 0.20
Adjusted EBITDA per share  $ 0.45  $ 0.51  $ 0.41
Shares outstanding - diluted  35,573 36,243  35,709
       
Adjusted EBITDA   $ 16,070  $ 18,415  $ 14,584
       
Other information:      
Capital expenditures  $ 1,472  $ 1,568  $ 2,445
Equity-based compensation expense, net of income taxes  $ 33  $ 23  $ 2,037
       
Billing days 62 63  61
     
     
Kforce Inc.
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
     
  Twelve Months Ended
     
  Dec. 31, 2012 Dec. 31, 2011
     
Revenue by function:    
 Technology   $ 675,587  $ 624,012
 Finance & accounting   238,476  219,575
 Health information management   76,992  68,711
 Government solutions   91,424  92,449
Total revenue 1,082,479 1,004,747
     
Costs of services 734,546 687,000
Gross profit  347,933  317,747
GP % 32.1% 31.6%
Flex GP % 29.0% 28.5%
     
     
Selling, general & administrative expenses 322,436 274,072
Goodwill impairment 69,158 --
Depreciation & amortization 10,789 12,505
     
(Loss) income from operations (54,450) 31,170
     
Other expense, net 1,116 1,256
     
(Loss) income from continuing operations, before income taxes (55,566) 29,914
     
Income tax (benefit) expense (19,854) 10,858
     
(Loss) income from continuing operations   (35,712)   19,056
     
Income from discontinued operations, net of income taxes  22,009  8,100
     
Net (loss) income  $ (13,703)  $ 27,156
     
Earnings (loss) per share - diluted  $ (0.38)  $ 0.70
Adjusted EBITDA per share  $ 1.42  $ 1.43
Shares outstanding - diluted  35,791 38,831
     
Adjusted EBITDA   $ 51,063  $ 55,510
     
Other information:    
Capital expenditures  $ 6,518  $ 7,662
Equity-based compensation expense, net of income taxes  $ 16,587  $ 7,529
     
Billing days  253  252
       
       
Kforce Inc.
Key Statistics
(Unaudited)
       
       
  Q4 2012 Q3 2012 Q4 2011
       
Total Firm      
Flex revenue (000's)  $ 258,743  $ 257,790  $ 249,183
Revenue per billing day (000's)  $ 4,173  $ 4,092  $ 4,085
Sequential flex revenue change 0.4% -1.2% -0.1%
Hours (000's)  4,405  4,328  4,225
Flex GP % 29.9% 29.6% 28.9%
       
Search revenue (000's)  $ 11,096  $ 12,371  $ 10,158
Placements   791  856  759
Average fee  $ 14,027  $ 14,456  $ 13,389
Billing days  62  63  61
       
Technology      
Flex revenue (000's)  $ 163,282  $ 165,342  $ 156,543
Revenue per billing day (000's) $ 2,634  $ 2,625  $ 2,566
Sequential flex revenue change -1.2% -0.4% -2.3%
Hours (000's)  2,511  2,520  2,420
Flex GP % 28.4% 28.4% 27.8%
       
Search revenue (000's)  $ 4,334  $ 5,235  $ 4,279
Placements   290  337  280
Average fee  $ 14,960  $ 15,536  $ 15,318
       
Finance & Accounting      
Flex revenue (000's)  $ 51,936  $ 51,661  $ 50,926
Revenue per billing day (000's)  $ 837  $ 820  $ 835
Sequential flex revenue change 0.5% -3.5% 6.0%
Hours (000's)  1,607  1,545 1,517
Flex GP % 30.8% 30.9% 30.0%
       
Search revenue (000's)  $ 6,688  $ 7,068  $ 5,746
Placements   498  513  450
Average fee  $ 13,434  $ 13,783  $ 12,759
       
Health Information Management      
Flex revenue (000's)  $ 19,332  $ 18,089  $ 18,445
Revenue per billing day (000's)  $ 312  $ 287  $ 302
Sequential flex revenue change 6.9% -8.5% 7.2%
Hours (000's)  287  263  288
Flex GP % 35.2% 35.9% 34.6%
       
Search revenue (000's)  $ 74  $ 68  $ 133
Placements  3  6  29
Average fee  $ 21,043  $ 11,384  $ 4,582
       
Government Solutions      
Flex revenue (000's)  $ 24,193  $ 22,698  $ 23,269
Revenue per billing day (000's)  $ 390  $ 360  $ 382
Sequential flex revenue change 6.6% 5.4% -2.6%
Flex GP % 34.3% 30.5% 29.5%
     
     
 Kforce Inc. 
 Consolidated Balance Sheets 
 (In Thousands) 
 (Unaudited) 
     
   Dec. 31, 2012   Dec. 31, 2011 
 ASSETS     
     
 Current Assets:     
 Cash and cash equivalents   $ 1,381  $ 939
 Trade receivables, net of allowances  151,570 174,764
 Income tax refund receivable  1,750 250
 Deferred tax asset, net  9,494 4,694
 Prepaid expenses and other current assets  7,364 5,592
 Total current assets   171,559  186,239
     
 Fixed assets, net   34,883  36,124
 Other assets, net   28,038  32,554
 Deferred tax asset, net   21,523  10,042
 Intangible assets, net   5,736  6,635
 Goodwill   63,410  138,078
 Total assets   $ 325,149  $ 409,672
     
 LIABILITIES AND STOCKHOLDERS' EQUITY   
     
 Current Liabilities:     
 Accounts payable and other accrued liabilities   $ 36,205  $ 26,314
 Accrued payroll costs   50,063  55,151
 Other current liabilities   11,564  1,463
 Income taxes payable   1,042  236
 Total current liabilities   98,874  83,164
     
 Long-term debt - credit facility   21,000  49,526
 Long-term debt - other   1,144  1,609
 Other long-term liabilities   34,285  42,258
 Total liabilities   155,303  176,557
     
 Commitments and contingencies     
     
 Stockholders' Equity:     
 Preferred stock   --  --
 Common stock   685  686
 Additional paid-in capital   400,688  372,212
 Accumulated other comprehensive loss   (2,713)  (4,050)
 Retained earnings   40,203  89,135
 Treasury stock, at cost   (269,017)  (224,868)
 Total stockholders' equity   169,846  233,115
 Total liabilities and stockholders' equity   $ 325,149  $ 409,672
             
             
Kforce Inc.
Selected Financial Information and Reconciliations
(In Thousands, Except Per Share Amounts)
(Unaudited)
             
Adjusted Net Income and Earnings Per Share Before Impairment Charge            
  Three Months Ended Dec. 31, 2012 Twelve Months Ended Dec. 31, 2012    
  $ Per share $ Per share    
Net income (loss)  $ 6,120  $ 0.17  $ (13,703)  $ (0.38)    
Goodwill impairment, pre-tax  3,858  0.11  69,158  1.93    
Tax benefit from impairment charge  (1,405)  (0.04)  (24,670)  (0.69)    
Goodwill impairment, after-tax  2,453  0.07  44,488  1.24    
Earnings Per Share Adjustment (*)  --   --   --   (0.01)    
Adjusted net income and earnings per share before impairment charge  $ 8,573  $ 0.24  $ 30,785  $ 0.85    
             
Weighted average shares outstanding - basic  35,530    35,791      
Weighted average shares outstanding - diluted  35,573    36,025      
             
"Adjusted Net Income and Earnings Per Share Before Impairment Charge," a non-GAAP financial measure, is defined as net income before the non-cash impairment charges related to goodwill. "Adjusted Net Income and Earnings Per Share Before Impairment Charge" should not be considered a measure of financial performance under generally accepted accounting principles and has been provided for consistency and comparability of the 2012 results with net income and earnings per share from prior periods. 
             
(*) This earnings per share adjustment is necessary to properly reconcile net loss per share on a GAAP basis to Adjusted Net Income per share. Earnings Per Share Before Impairment Charge, a non-GAAP financial measure, is based on Net Income Before Impairment Charge and diluted weighted average shares outstanding; however, the reconciling items within the table above are based on basic weighted average shares outstanding, as the inclusion of dilutive securities such as stock options and stock awards would have an anti-dilutive effect on loss per share. 
             
             
Quarterly Adjusted EBITDA            
  Three Months Ended
  Dec. 31, 2012 Sept. 30, 2012 Dec. 31, 2011
  $ Per share $ Per share $ Per share
             
Net income  $ 6,120  $ 0.17  $ 9,268  $ 0.26  $ 7,085  $ 0.20
Income (loss) from discontinued operations, net of income taxes 198  0.00 (7) (0.00) 1,998 0.06
Income from continuing operations  $ 5,922  $ 0.17  $ 9,275  $ 0.26  $ 5,087  $ 0.14
Goodwill impairment, pre-tax  3,858  0.11  --   --   --   -- 
Depreciation & amortization  2,371  0.07  2,659  0.07  3,013  0.09
Amortization of restricted stock & PARS  53  0.00  38  0.00  3,190  0.09
Interest expense and other  148  0.00  270  0.01  342  0.01
Income tax expense  3,718  0.10  6,173  0.17  2,952  0.08
Adjusted EBITDA  $ 16,070  $ 0.45  $ 18,415  $ 0.51  $ 14,584  $ 0.41
             
Weighted average shares outstanding - basic  35,530    36,204    34,549  
Weighted average shares outstanding - diluted  35,573    36,243    35,709  
             
 
 
         
         
         
Full Year Adjusted EBITDA        
  Twelve Months Ended
  Dec. 31, 2012 Dec. 31, 2011
  $ Per share $ Per share
         
Net (loss) income  $ (13,703)  $ (0.38)  $ 27,156  $ 0.70
Income from discontinued operations, net of income taxes 22,009  0.62 8,100 0.21
(Loss) income from continuing operations  $ (35,712)  $ (1.00)  $ 19,056  $ 0.49
Goodwill impairment, pre-tax  69,158  1.93  --   -- 
Depreciation & amortization  10,789  0.30  12,505  0.32
Acceleration of restricted stock & PARS  22,158  0.62  --   -- 
Amortization of restricted stock & PARS  3,530  0.10  11,819  0.30
Interest expense and other  994  0.03  1,272  0.04
Income tax (benefit) expense  (19,854)  (0.55)  10,858  0.28
Earnings Per Share Adjustment (*)  --   (0.01)  --   -- 
Adjusted EBITDA  $ 51,063  $ 1.42  $ 55,510  $ 1.43
         
Weighted average shares outstanding - basic  35,791    37,835  
Weighted average shares outstanding - diluted  36,025    38,831  
         
Adjusted EBITDA, a non-GAAP financial measure, is defined as earnings before discontinued operations, non-cash impairment charges, interest, income taxes, depreciation and amortization and stock-based compensation expense. Adjusted EBITDA should not be considered a measure of financial performance under generally accepted accounting principles. Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. 
         
(*) This earnings per share adjustment is necessary to properly reconcile net loss per share on a GAAP basis to Adjusted Net Income per share. Earnings Per Share Before Impairment Charge, a non-GAAP financial measure, is based on Net Income Before Impairment Charge and diluted weighted average shares outstanding; however, the reconciling items within the table above are based on basic weighted average shares outstanding, as the inclusion of dilutive securities such as stock options and stock awards would have an anti-dilutive effect on loss per share. 
         
Adjusted Net Income and Earnings Per Share Before Impairment Charge and Adjusted EBITDA are key measures used by management to evaluate its operations and to provide useful information to investors. These measures should not be considered in isolation or as an alternative to net income, cash flows data or other financial statement information presented in the consolidated financial statements as indicators of financial performance or liquidity. These measurements are not determined in accordance with generally accepted accounting principles and are thus susceptible to varying calculations. The measures as presented may not be comparable to similarly titled measures of other companies.
CONTACT: Michael R. Blackman
         Chief Corporate Development Officer
         (813) 552-2927

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